Deferred compensation is generally known as compensation that is not immediately paid to an employee. Types of deferred compensation include, for example, stock option awards, restricted stock awards (e.g. restricted stock units), 401(k) distributions, retirement plan distributions, and the like. Generally, a company may incentivize an employee with stock options that are provided to the employee in lieu of immediate monetary compensation. Typically, these stock options may not be exercised or sold before a specific event occurs (e.g. a certain period of time passes, the stock price reaches a certain level, the employee achieves a particular goal or milestone, etc). To complicate matters further, employees often move locations before the deferred compensation is paid. As such, a tax liability may attach in multiple jurisdictions, thereby requiring an employer to determine taxes due to the respective jurisdiction(s) where the employee lived and/or worked; when the employee was originally awarded the deferred compensation; during the required vesting period; and/or when the employee ultimately received the proceeds from the award.
Further, regulatory agencies governing settlement of publicly traded assets of companies require that these transactions and the corresponding tax liabilities be settled in mandated periods of time. For example, the U.S. Securities and Exchange Commission requires that employers settle stock option transactions and determine applicable tax liability within three days of the stock option exercise. As such, there is a need to determine location information for a deferred compensation transaction in real-time so that the transaction is settled and the tax liability is determined within the mandated period of time. Further, there is a need to insure that tax liability is determined properly to avoid penalties, fines, and audits by taxing authorities.